But, fearing a price spike, it granted Iran's biggest buyers - China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey - sanctions waivers.
US West Texas Intermediate (WTI) crude oil futures were at $65.73 per barrel at 0629 GMT, 6 cents above their last settlement. Even if Iran's oil sales drop to 800,000 barrels per day (bpd), we will be able to run the economy. But perhaps with an eye on the mid-term United States elections on Tuesday, he made it clear that keeping crude prices low was also a priority.
Homayoun Falakshahi, senior upstream analyst at consultancy Wood Mackenzie, noted that the latest wave of sanctions were more focused on restricting Iran's ability to earn revenues from the sale of crude and condensate and less on actually reducing its cargoes to nil.
Fund managers still favour bullish long positions over bearish short ones by a ratio of nearly 5:1, but the ratio has sunk from more than 12:1 only five weeks ago.
India has "demonstrated" significant reductions in its crude oil imports from Iran.
"Iran's situation is better than pre-2016 because of high oil prices and the fact that the USA is isolated this time", said a European diplomat who asked not to be further identified. "We believe Brent prices are oversold as fundamentals still point to a market deficit in 4Q18", Hinds writes. Prices rallied back above $73 on Wednesday, supported by the TASS report.
Analysts continue to believe that oil's slide is a case of bad timing.
The United States will exempt from sanctions the development of Chabahar along with an attached railway project and Iranian petroleum shipments into Afghanistan, the State Department said. The waivers, he notes, are temporary and growth in demand is "likely underestimated". As Pompeo referred to the exemptions for the eight countries as "temporary", surely negotiations continue between the United States and India on how to satisfy Washington's sanctions aims and India's strategic necessities.
Speaking in Madrid after a meeting with his Spanish counterpart Josep Borrell, the Russian foreign minister said Washington had used "unacceptable methods" to exert pressure on operators of the Belgian-based SWIFT global payment network to cut off Iranian banks. At the same time, spare capacity is at significantly low levels, tightening the oil market. Perhaps that will come from Libya and Nigeria, which are heading into elections that could lead to sustained periods of instability, further disrupting oil supplies. Expectations for weaker-than-anticipated global economic growth, the ongoing U.S.
While crude oil prices somewhat strengthened in early morning trade on news that Russian Federation and Saudi Arabia were in talks to cut down crude output next year, oil prices pared earlier gains once the U.S. Energy Information Administration revealed domestic crude inventories rose 5.8 million barrels last week, or more than double expectations, Reuters reports.